England and Wales Court of Appeal (Civil Division) Decisions

		Neutral Citation Number: [2002] EWCA Civ 1083
		Case No: B1/2002/0381

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CANTERBURY COUNTY COURT
(His Honour Judge Poulton)
(District Judge Green)

		Royal Courts of Justice Strand, London, WC2A 2LL
		24th July 2002

B e f o r e :

LORD JUSTICE BROOKE
LORD JUSTICE DYSON
and
Mr JUSTICE WALL
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Between:


	MELISSA MAGUIRE	Claimant/ Appellant
	- and -
	RICARDO DAVID MOLIN	Defendant/Respondent

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(Transcript of the Handed Down Judgment of
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____________________

Mr Robert Leonard (instructed by Messrs Gambrills) for the Appellant
The Respondent did not appear and was not represented
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HTML VERSION OF JUDGMENT
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Lord Justice Dyson : This is the judgment of the court:

1. This is an appeal by the claimant from the dismissal by His Honour Judge Poulton at Thanet County Court on 7 February 2002 of her appeal from a decision by District Judge Green on 7 December 2001 refusing permission to amend the particulars of claim and schedule of special damages. It is a second appeal. Permission to appeal to this court was granted by Potter LJ because the procedural issues raised are of some general importance. One of the questions that arises is whether a district judge or master, who is conducting a trial of liability, can continue to conduct the trial if an amendment is allowed which takes the financial value of the claim over the normal £15,000 limit for the fast track to which it has been allocated; or whether, if the amendment is allowed, the claim should be reallocated to the multi-track. The defendant’s solicitors have come off the record, and the defendant appears to have left his address for service, except for the purpose of collecting mail. In these circumstances we only heard argument on the appeal from Mr Leonard, on behalf of the claimant.
2. The claim is in respect of personal injuries suffered by the claimant when she was 15 years of age. On 8 January 1999, she suffered carbon monoxide poisoning from a defective heater in a flat while she was at a flat which her sister, Donna, was renting from the defendant. It is her case that, as a result of the incident, she suffered from post-traumatic stress disorder and depression. Proceedings were issued on 7 December 2000. The damages claimed were limited to £15,000. Her claim for special damages was quantified at £585, being 13 weeks loss of wages at £45 per week.
3. It appears that insufficient care was taken when her claim was formulated in December 2000. Her present solicitor says that he cannot and does not seek to explain why the question of her losses was not fully addressed at that time. He makes it clear that no blame can be attached to the claimant or her father. In fact she lost her wages as a part-time waitress for about 18 months, and not for only 13 weeks: it is now asserted that she lost £5,490 during the period up to June 2000. More significantly, her future career plans were thrown out by the consequences of her accident. She had planned to start a three year course in child care in September 1999, and while she would have continued with her part-time job as a waitress for the first year of the course, she had hoped to receive income from work placements between September 2000 and June 2002.
4. It was realised in the autumn of 2001 that the development of her career in a caring job would have been delayed by three years as a consequence of the accident, and this led to a significant claim for future loss. An additional head of loss which was not explored at all in December 2000 related to her father’s loss of wages. He had been off work, being with his daughter constantly and providing her with care and emotional support, for nearly two years at that time, and in the end it seemed likely that he would have had to take three and a half years off work for this purpose. While the full amount of this claim could not have been computed accurately in December 2000, enough would have been known about it to put it a long way above the financial limit of £15,000 for a fast track claim.
5. The scale of the problems facing the claimant would have been obvious in December 2000 to anyone reading the two medical reports which were then available. In February 2000 Mr Richard Kerry, a clinical psychologist, reported that she had suffered significant distress as a result of the incident: she could not work, had lost interest in most things and had little social life as a result. He felt it would take her 2-5 years to achieve a full recovery, and there was always a possibility of a long-term disability or relapse. Her pathetic state was also recorded in a joint report from two specialists at Guy’s Hospital dated October 2000, which spoke of recurrent headaches and frequent mood swings. These led to her spending most of her time at home.
6. A defence was served. The defendant denied liability for the escape of carbon monoxide. He pleaded that he had not supplied or installed the heater. On 8 February 2001, District Judge Morling allocated the claim to the fast track and gave directions. These included a direction with the effect that there should be simultaneous exchange of witnesses of fact by 19 April. In fact the original witness statements of the claimant and her father were both dated 5 June 2001. Each described how the claimant was in a miserable state (“I am like a vegetable compared to what I was”), but no attention seems to have been paid at that stage, either, to the true financial consequences of her plight. On 17 July, District Judge Green ordered the trial of the action to be listed for a fast track hearing on 11 October with a time estimate of one day. It appears that on 25 September 2001, the claimant’s solicitors decided to take a longer statement from her, and her witness statement of that date is an expanded version of her earlier one. Her solicitors then sought advice from counsel for the purpose of extending their client’s legal funding certificate, and this advice, dated 3 October 2001, alerted them to the question whether quantum had been sufficiently set out and supported by evidence.
7. They did not tell the defendant’s solicitors or the district judge that they now realised that their client’s claim was likely to exceed the fast track limit by a considerable margin. Instead, when the trial started on 11 October (with the pleadings still in their original form) the district judge was told that the medical evidence was out of date. He decided, therefore, to determine liability as a preliminary issue. When the case was adjourned at the end of 11 October, the evidence of the claimant’s witnesses had been completed as had the evidence of the defendant himself. One of the defendant’s witnesses was a Mr Reeve. During the course of his cross examination, counsel for the claimant put a document to him which had not been disclosed: it was privileged. The district judge decided that Mr Reeve needed time to consider it. Accordingly, the case was adjourned part heard until 7 December.
8. During the adjournment, the claimant’s solicitor made a further appraisal of the value of the claim. He decided that its true value was a good deal more than £15,000, and that it would be necessary to seek permission to amend her pleadings. On 29 October, he issued an application for further directions. A directions hearing was fixed for 22 November. On 14 November, he obtained an updated report from Mr Kerry, the psychologist whom he had retained as the claimant’s expert witness. This showed that the claimant continued to suffer from post traumatic stress disorder, was not fit for work, needed urgent psychological treatment and that it might be another 2-5 years before she made a full recovery. The solicitor also obtained a further witness statement from the claimant dated 29 November dealing with her claim for damages.
9. Draft amended particulars of claim were prepared in which the limitation of £15,000 was deleted. An updated schedule of special damages was also prepared. This claimed past loss of earnings of £10,412. It comprised (a) loss of £45 per week (as a part-time waitress) for 22 weeks from 8 January 1999 until 14 June 1999; (b) £90 per week (still as a waitress, but working longer hours) for 50 weeks from 15 June 1999 until June 2000; and (c) loss of £277.33 per month (on placements during a child care course in which she would have enrolled) from September 2000 until June 2002. She also claimed future loss of earnings in the sum of £16,472 for work as a child carer. The other principal head of special damages was in respect of care provided and to be provided by the claimant’s father. The sum claimed was £34,006. The total sum claimed as special damages was £62,494.98. If general damages were taken into account, this meant that the amended claim was for a sum of the order of £80,000.
10. The claimant’s solicitor invited the defendant’s solicitor to agree proposed directions which included that permission be granted to file an updated schedule of special damages by 30 November. On 20 November, he sent draft directions to the defendant’s solicitor together with the draft particulars of claim. He had not yet sent a copy of the revised schedule of special damages. Incautiously, on 20 November the defendant’s solicitor replied saying that he could agree the draft directions on the basis that the schedule was served by 23 November.
11. On 22 November, the claimant’s solicitor alone appeared before the district judge. The district judge adjourned the application for permission to amend the particulars of claim until 7 December, saying that he would deal with it before the resumption of the adjourned hearing.
12. Thus it was that on 7 December, application was made for permission to delete the limitation of £15,000, and to serve the updated schedule of special damages. The district judge refused the applications. Before we come to his reasons for so doing, we ought to deal briefly with the outcome of the substantive hearing that took place on 7 December. Having decided to limit the hearing to the issue of liability, the district judge decided that issue in favour of the claimant. He was satisfied on the evidence that the defendant did install the heater, and that liability was therefore established.

The reasons of the District Judge for refusing the application

13. The district judge reminded himself that he was required to have regard to overall objective of dealing with cases justly. He took into account the fact that, if the defendant had known that he was facing a multi-track claim at the outset, he might well have prepared for the hearing on liability in a different and more thorough fashion. He might have used other experts, other solicitors and counsel, possibly even leading counsel. If the amendment were allowed, there would undoubtedly be further costs in response to what had become an unlimited claim. In particular, the defendant was going to want further expert evidence, and that might in turn cause the claimant to seek further expert evidence, for example, from employment consultants. On the other hand, the amendment would not result in any additional hearings, since it was clear that he had not been able to deal with quantum at the first hearing and would not be able to deal with it at the second hearing. He had a duty to take into account the importance of the case to the claimant and to the defendant; the complexities of the issues and the financial position of each party; and to ensure that the case was dealt with expeditiously and fairly, which included that no party was “caught out by late amendments and put in a position where they have not approached the case on the basis that the claim is going to be of a high value”. He then said this:

“There can be no doubt that this amendment is sought to be made very late in time. I think I am entitled to take into account that this cause of action is alleged to have arisen on the 8^th January 1999. The proceedings were started on the 7^th December 2000. We are now just a few weeks short of the third anniversary of the particular incident.

It appears to me that the claimant has had adequate time to prepare and explore her case. If the claimant and her advisers were unsure as to the exact value of the claim first of all they could have made it clear in the particulars of claim that there was no limit on the damages that they sought. They could have made it clear to the defendant in the particulars of claim and otherwise that they were still seeking medical evidence and would serve a final schedule of special damages in due course. They could have delayed issuing proceedings until such time as the position was clearer. There are a number of steps which they could have taken to avoid this situation that has occurred.

Having taken into account the overriding objective, I think to allow this amendment would not be to deal with the case justly because of the disadvantage that would be caused to the defendant by it being allowed, not in respect of preparing for a quantum hearing but in respect, in particular, of the way that it has been prepared for this liability hearing. I do not think that it would be adequate to deal with that unfairness and lack of justice in effect to consider this hearing as abortive, to set it aside and to direct that there should be a further hearing before a circuit judge, and that the claimant should bear the costs thrown away.

In the circumstances, I am not prepared to allow this amendment. The application to amend the particulars of claim is refused. The matter will continue on the basis of the original pleading.”

The decision of the judge

14. The judge referred to the fact that the application was made very late. But “one cannot really be sure what the defendant would have done and how he would have acted if the size of the claim had been declared to him before the hearing”. The hearing of 7 October was originally intended to be sufficient to dispose of the entire claim, and yet the amendment was not put forward until after that hearing had begun. Perhaps of more significance, the judge said that “the moment that it became a claim for £80,000 or thereabouts it should have been reallocated. It would of course have been possible under the reallocation provisions in the Civil Procedure Rules to reallocate the hearing as to quantum, but it would have been very difficult to deal with reallocating the hearing as to liability, because it was part heard”. And a little later, the judge said:

“It would seem to me, bearing in mind that this is not a matter entirely for the agreement of the parties, that it would have been quite wrong if it had been known how large this case was to leave it in the fast track. It is not simply a question of the defendant making different provisions to the way he conducted the trial, it is also a question of the tribunal which hears it, because the district judge has jurisdiction to hear, and frequently does hear, a fast track case – he has no such jurisdiction with a multi-track case – and with a claim of this size a defendant ought to be entitled to a hearing before a circuit judge, with an appeal to the Court of Appeal, and not simply a hearing before a district judge with an appeal to the circuit judge. That seems to me to be the very root of the new provisions in the Civil Procedure Rules, and that is a complication in this case. As I say, it is not in terms referred to by the district judge, but I think it is what he means when he says:

‘I do not think it would be adequate to deal with the unfairness ...’

Meaning the unfairness to the defendant:

‘...to set aside this hearing with the claimants bearing the costs thrown away. In the circumstances, I am not prepared to allow the amendment.’”

15. The judge went on to say: “if it were not for the question of the wrong track, then I would consider that the authorities indicate that even a late amendment such as this should be allowed”. There were only two courses open to the district judge: (a) to refuse the amendment and continue with the claim on the fast track; or (b) not to continue with the hearing, but to allow the amendment, abort the liability hearing and reallocate the case to the multi-track. The judge concluded: “in the peculiar circumstances of this case, I do not consider that the district judge’s conclusion can be said to have been plainly wrong, or that he misdirected himself in law or as to the proper procedure”. Accordingly, he dismissed the appeal.

Submissions to this court on behalf of the claimant

16. Mr Leonard submits that the decision of the district judge was wrong for the following reasons. Amendments ought in general to be allowed so that the real dispute between the parties can be adjudicated upon, provided that any prejudice to the other party can be compensated for in costs and the public interest in the administration of justice is not significantly harmed: see per Peter Gibson LJ in Cobbold v London Borough of Greenwich [CA 9 August 1999].
17. The fast track is the normal track for any claim for which the small claims track is not the normal track, and which has a financial value of not more than £15,000 (CPR 26.4). But under CPR 26.8, the financial value is only one of the matters to which the court should have regard when allocating.
18. If the application for permission to amend ought otherwise to have been granted in this case, the fact that the claim was before the district judge on the fast track should have presented no problems. There was no need for the amendment to be dealt with until liability had been determined, particularly as the district judge made clear that he would not have dealt with the assessment of damages in any event on 7 December. The district judge should not, therefore, have considered the application for permission to amend until he had determined the issue of liability. It followed that the judge was in error in holding that the district judge had only two options.
19. In any event, even if the district judge had allowed the amendment, that was not a good reason for not completing the trial of the issue of liability on the fast track. It is seriously open to question whether the district judge had the power to abort the trial and order a new trial before a circuit judge on the multi-track.
20. The amendment should have been allowed. The issue of liability was a straightforward one of fact, which depended entirely on oral evidence. There was no evidence that the defendant would have been prejudiced by the late amendment. At any rate, the prejudice to the claimant, in not allowing the amendment and restricting her claim to £15,000, outweighed any prejudice suffered by the defendant. Although the application came late in relation to the hearing which was originally intended to include both liability and quantum, proceedings had been issued well within the limitation period. Neither the determination of the issue of liability nor the assessment of damages would be delayed by the late amendment.

The relevant procedural provisions

21. The Civil Procedure Rules make detailed provisions for determining to which track a claim should be allocated. The financial value of the claim is an important factor. Where the financial value exceeds £15,000, the normal track is the multi-track: see CPR 26.6(6). CPR 26.7(3) provides: “The court will not allocate proceedings to a track if the financial value of any claim in those proceedings…exceeds the limit for that track unless all the parties consent to the allocation of the claim to that track”.
22. CPR 26.8(1) provides:

“(1) When deciding the track for a claim, the matters to which the court shall have regard include –

(a) the financial value, if any, of the claim;

(b) the nature of the remedy sought;

(c) the likely complexity of the facts, law or evidence;

(d) the number of parties or likely parties;

(e) the value of any counterclaim or other Part 20 claim and the complexity of any matters relating to it;

(f) the amount of oral evidence which may be required;

(g) the importance of the claim to persons who are not parties to the proceedings;

(h) the views expressed by the parties; and

(i) the circumstances of the parties.”

23. CPR 26.10 provides that “the court may subsequently re-allocate a claim to a different track”.
24. There are also relevant provisions in the Practice Direction to CPR 26. 26PD. para 11.2 provides that “where there has been a change in the circumstances since an order was made allocating the claim to a track the court may reallocate the claim. It may do so on application or on its own initiative”. 26PD. para 12 makes provision for allocation and case management of assessment of damages and allied proceedings, and deals inter alia with the assessment of damages following a trial as to liability. Directions may include a direction allocating or reallocating the claim (para 12.2(1)(a)). 26PD. para 12.10 provides that “unless the court otherwise directs, a master or a district judge may decide the amount payable under a relevant order irrespective of the financial value of the claim and of the track to which the claim may have been allocated”.

Discussion

25. It seems to us that the starting point is to ask what options were available to the district judge when he was dealing with the application for permission to amend. Was the judge right when he said that there were only two courses open: (a) allow the application, abort the hearing of liability and re-allocate to the multi-track for trial by a circuit judge; or (b) refuse the application and continue with the hearing on the fast track?
26. In our judgment, if the judge was saying that these were the only two courses available as a matter of jurisdiction, then he was wrong. The district judge had jurisdiction to allow the amendment and continue with the hearing of the issue of liability on the fast track. It is true that CPR 26.8(1) shows that the financial value of a claim is an important factor to which regard must be had when deciding to which track a claim should be allocated, and that CPR 26.7(3) provides that the court will not allocate proceedings to a track if the financial value of the claim exceeds the limit for that track unless all the parties agree. But these are rules which determine to which track a claim should be allocated in the first place. So long as a claim remains in the fast track, the district judge has jurisdiction to hear it: see 2B PD para 11.1(a). A claim does not cease to be in the fast track simply because its financial value has been increased beyond the £15,000 limit. If, however, a claim is amended so that its financial value exceeds £15,000, then the question arises as to whether the district judge should re-allocate it to the multi-track under CPR 26.10. In our judgment, the question of re-allocation of a claim from one track to another does not necessarily raise the same issues as those which arise when the initial allocation decision is made. CPR 26.10 gives the court an apparently unfettered discretion. This must have been quite deliberate. The draftsman must have intended to give the court some flexibility in deciding how to exercise the discretion given by CPR 26.10. If it had been intended to provide that, in the absence of the consent of all parties, the court must in all circumstances re-allocate a claim to the multi-track if, as a result of an amendment, the financial value exceeds £15,000, then we would have expected this to be expressly stated.
27. Since (a) there is nothing in the rules to suggest that a district judge or master does not have jurisdiction to continue to hear a fast track claim if it is amended so that its financial value exceeds £15,000, and (b) CPR 26.10 on its face confers an unfettered discretion to re-allocate, we see no reason to interpret the rules as excluding jurisdiction to continue to hear the claim where it is so amended, if in all the circumstances it is just to do so.
28. Where a claim has been amended so that its financial value exceeds £15,000, the next question is: what are the criteria which a district judge should apply when deciding whether to continue to hear a claim in the fast track, or to re-allocate to the multi-track? In our view, considerations that are potentially relevant to the exercise of the power to re-allocate a claim undoubtedly include those that are relevant to the initial allocation decision (CPR 26.8(1)). But other factors may have to be taken into account as well. Once a claim has been allocated to a track, there needs to be a good reason to re-allocate it to a different track. Re-allocation may cause disruption to the progress of the litigation, especially if it occurs late in the process. Clearly, the amount by which the financial value of the claim exceeds the normal limit for a track as a result of the amendment is a highly relevant consideration. If the amount by which the limit is exceeded is small, it will usually be a factor of little weight, and may well not lead to a re-allocation, particularly if it could not reasonably have been foreseen at the time when the claim was first formulated and allocated to track. If the amount is large, then it will be a factor of very great importance, and will usually require a re-allocation.
29. It is important to understand why the financial value of the claim is a factor of great significance. As the editors of the White Book Service 2002 say at para 28.0.2 “the fast track is intended as a limited procedure designed to take straightforward cases to trial within a short but reasonable timescale. It is designed for cases which exceed the limit for the small claims track and which do not need the more detailed procedure of the multi-track ie generally cases valued at £5,000 but less than £15,000”. Where a claim has been allocated to the fast track, the court will usually allow only one day for the trial and make particularly limited orders for expert evidence: see CPR 26.6(5). Part 46 makes provision for fast track trial costs. CPR 46.2(1) specifies the amount of fixed costs that may be awarded according to the value of the claim.
30. The upshot of this is that a defendant to a claim that has been allocated to the fast track knows that the trial is likely to be short, expert evidence limited, and that if he is successful he is likely to be awarded only comparatively modest fixed costs for the trial itself. These factors are intended to influence his decision as to the resources that he will deploy in defending a claim, and are likely to do so. Where a defendant is defending a claim that has been allocated to the multi-track, very different considerations apply. This is the clear purpose and effect of the rules. The different treatment accorded to fast track and multi-track claims is intended to bring about an approach to the conduct of litigation that is proportionate to what is at stake.
31. Another relevant factor that must be taken into account when a decision is made by a district judge whether to continue with a trial or re-allocate the claim is that the category of judge chosen to try a claim is of importance. This is reflected in the fact that multi-track cases cannot be tried by a district judge or master in the absence of the consent of all parties and the permission of the designated civil judge in respect of that case. (see 2B PD para 11.1(d): we leave out of account the special provisions made by 26 PD para 12.10, and by 2B PD para 11.1.(a) in relation to claims which are treated as being allocated to the multi-track under certain rules.)
32. We would, therefore, hold that, if the revised financial value exceeds £15,000 by a small amount, the claim may be re-allocated to the multi-track, but it will usually be wrong to re-allocate if that will cause substantial disruption to the progress of the litigation. But where the excess is substantial, then there should usually be a re-allocation, even if that means causing considerable delay to the completion of the litigation.
33. On any view, a claim for damages of approximately £80,000 was substantially above the £15,000 limit. If the amendment had been allowed in the present case, the claim would have been of a different order from the claim in its original form. In our judgment, the district judge was entitled to take the view that, if he had allowed the amendments, it would have been wrong for him to continue with the trial, and that he would have had no alternative but to re-allocate the claim to the multi-track, and order a rehearing before a circuit judge. That would have been a perfectly proper exercise of his discretion. The amendments would have resulted in a revised financial value of the claim that was substantially in excess of the £15,000 limit. For the reasons already mentioned, that is a factor of importance militating in favour of re-allocation. It is true that a decision to re-allocate at a very late stage would have caused considerable disruption to the progress of the litigation. But the need for the amendment did not arise from unforeseeable events. Rather, it arose from the claimant’s solicitor’s failure to make a proper appraisal of the true value of the claim in due time. That is a cogent reason for holding that the defendant should not be prejudiced by the amendment. Although we regard as fanciful the suggestion that he might have instructed leading counsel if the claim had been allocated to the multi-track in the first place, there is force in the argument that the defendant might have deployed more resources to his defence if he had known from the outset that he was facing a claim for approximately £80,000 on the multi-track.
34. Having reached the decision that it would have been wrong for him to continue to hear the issue of liability on the fast track, the district judge did indeed only have the two options to which we have earlier referred, viz allow the amendment, re-allocate and abort the trial of liability, or refuse permission to amend. Mr Leonard has raised a doubt as to whether the district judge had the power to take the former course. But as Brooke LJ pointed out in argument, this could have been achieved by an order granting permission to amend on conditions that included that the claimant started again on the multi-track before a circuit judge. In our judgment, the district judge was entitled to exercise his discretion to refuse to abort the trial at this late stage.
35. Mr Leonard submits that the district judge failed to appreciate that the prejudice to the claimant in denying her permission to amend far outweighed the prejudice to the defendant in granting it. But this was a very late application. On the face of it, there had been an obvious but unexplained error on the part of the claimant’s solicitor. In our judgment, the district judge was entitled to take the view that the application was too late, and that the delays and additional costs of aborting the trial on liability were such that, in the interests of justice, the amendment should be refused. This was an exercise of discretion that cannot be impugned. As the judge put it, the decision of the district judge was not “plainly wrong”.
36. Mr Leonard submits that the district judge could and should have avoided the problem by refusing to deal with the application for permission to amend until after he had determined the issue of liability. We would reject this submission for a number of reasons. First, we note that the claimant’s solicitor chose in the first place to apply for permission to amend on 22 November 2001 ie before the date fixed for the adjourned hearing. It was only because the district judge was (rightly) unwilling to deal with the application without sight of the updated schedule that the application was not dealt with on that occasion. Secondly, Miss Wright, counsel who appeared on 7 December and made the application for permission to amend, did not seek to persuade the district judge to postpone dealing with it until after he had disposed of the issue of liability. In these circumstances, it is difficult to see how the district judge can properly be criticised for failing to take that course. Thirdly, and fundamentally, to postpone dealing with the application in order to overcome the “problem” would in our view have been an unacceptable artificial device. 28PD para 4.2(1) provides that “it is essential that any party who wishes to have a direction varied takes steps to do so as soon as possible”. It is entirely inconsistent with this provision that a court should be asked to postpone making a case management decision which, if made, would have the effect of varying a previous direction. If the amendment were to be allowed, fairness to the defendant required that he should know where he stood as soon as possible. If there were to be an application to amend which, if allowed, would convert a claim from one which naturally belonged to the fast track to one which naturally belonged to the multi-track, then, having regard to the considerations mentioned earlier in this judgment, this had to be made and determined as soon as possible.
37. For these reasons, we are of the view that the district judge reached the right decision, or at any rate one that the judge was right to hold was not plainly wrong. We dismiss this appeal.